Germany Courts Bottom of Class to Fix Looming Labor Need

Trainees learn auto painting techniques at the Porsche plant in Leipzig. Vocational training has traditionally been one of Germany’s strengths, prompting the European Commission to call for similar systems to be introduced across the continent. Photographer: Sean Gallup/Getty Images

Aug. 18 (Bloomberg) -- A looming labor shortage is
prompting German companies to seek new recruits in an unlikely
place -- the bottom of the class.

Kevin Reber, 22, rejected for vocational training because
of poor math grades, is one of 250 young people enrolled in a
one-year course by chemical maker BASF SE that teaches team
work, conflict resolution and repeats failed school subjects.
Seventeen-year-old Fabian Scholz, on a similar program at
Deutsche Bahn AG, is learning to correct the bad attendance that
spoiled his chances of advancing.

“We don’t try to recruit the best but those that fit best
to the demands of the job,” BASF vocational training head
Richard Hartmann said in an interview at the Ludwigshafen base
of the world’s biggest chemical maker. “Someone who got a great
score and trains as a factory mechanic probably won’t be content
to stay. We need workers that do a skilled manual job over the
years.”

German companies are giving job seekers like Reber and
Scholz a second chance as a shrinking birth rate and aging
population put its 1 trillion-euro ($1.3 trillion) export
economy at risk. The country, whose unemployment rate is already
at the lowest in two decades, may lose a net 2 million working-age people by 2025, according to a May report by the Institute
of Job Market and Occupational Research, or IAB.

Falling Birthrate

Germany’s birth rate has dropped to half of its peak 50
years ago. With 8.4 births per 1,000 people, the country has
Europe’s second-lowest rate after Monaco, according to a Central
Intelligence Agency estimate. It also has the European Union’s
oldest population with a median age of 45, a Federal Institute
for Population Research report in November showed.

The small and medium-sized firms known as the Mittelstand,
which form the backbone of the economy, are experiencing the
squeeze more than bigger and better-known companies, whose size
and name often make them more attractive employers.

German businesses spend about 23 billion euros a year on
vocational training, according to estimates by German industry
and trade associations.

Difficulties in securing leadership talent as well as
skilled labor now top the list of concerns for SMEs, according
to a July study by the Institute for Mittelstand Research in
Bonn. A trend to encourage more schoolgoers to study at
university is exacerbating the shortage of manual labor.

The deficit is a reversal of the labor market from 10 years
ago, said Ulrike Stodt, head of professional development at
Deutsche Bahn. When the railway company set up its program in
2004, there were too many applicants and not enough trainee
slots, she said. Now the opposite is true.

Snapped Up

“Youths that didn’t get a vocational training position
five to six years ago are now being snapped up,” Stodt said in
an interview. “You have a much better chance with significantly
worse grades compared with 10 years ago.”

Similar programs have sprung up at other big German
companies. Deutsche Telekom AG has been running one since 2009
and Porsche AG started a course two years ago.

“Companies will have to better exploit workers’
potential,” said Andreas Scheuerle, an economist at Dekabank in
Frankfurt. “They need to have better training and qualify more
people that can fulfill the needs of the company.”

The demographic shift could cost Germany 0.2 percentage
point of gross domestic product growth a year until 2050,
according to a study by Prognos AG, a Basel, Switzerland-based
research institute.

Hands-On Experience

Vocational training has traditionally been one of the
country’s strengths, prompting the European Commission to call
for similar systems to be introduced across the continent. The
training, which has its origins in the Middle Ages when guilds
developed programs to teach their craft, offers hands-on
experience directly at the companies. Classroom lessons take
place only one or two days a week.

Spain, Greece, Portugal, Italy, Slovakia and Latvia are
considering adapting their vocational training programs to the
German model, according to a 2013 study commissioned by the
Bertelsmann Foundation.

Most of the participants in BASF’s course won’t end up
working for the chemical maker but will instead find employment
with suppliers, customers, or other companies in the Rhine
region, Hartmann said. BASF sees benefits in helping smaller
local firms find trainees.

BASF, which can still attract enough candidates to fill its
own vacancies, has boosted regular trainee numbers to 750. The
250 participants in its special preparation program come on top.

Bear Fruit

Reber’s practical work takes place at textile-maker Planex,
a business partner of BASF, less than 10 kilometers (6.2 miles)
away from the chemical maker’s main Ludwigshafen site.

“When someone has attended school for eight to 10 years
and it didn’t really bear any fruit, then it’s time to change
the method,” Hartmann said. “Some students are reliable and
hardworking but have cognitive weaknesses. Others are clever but
don’t apply it to the job. There it’s more about motivation,
reliability, ability to concentrate, sticking with something.”

BASF has a social worker on hand to advise on topics from
healthy eating to mobile-phone contracts and broken hearts. The
program includes martial arts-based attitude training, rap music
and a session with Olympic weightlifter Matthias Steiner.
Steiner, an Austrian with German citizenship, has gained a
following out of admiration for how he publicly dealt with the
loss of his wife after winning gold in the 2008 summer Games.

Success rates of the preparation programs are about 70
percent to 75 percent as reflected by the students’ acceptance
into regular vocational training. Some even end up best in the
class, said Husam Azrak, a Deutsche Telekom spokesman.

For Reber and Scholz, the benefits are evident. Reber has
been accepted as a regular trainee at BASF’s partner company
Planex as of September and Scholz’s missed days are a thing of
the past.

“For me, it’s changed things completely,” Scholz said.
“Now I can overcome the trivialities that stopped me going to
school. I have great colleagues. Work is fun.”